University of Illinois criticized after contract raises conflict of interest concerns

The University of Illinois handed out a $4.6 million contract to an architectural firm partially owned by the husband of a key administrator who oversees the planning of campus construction projects.

The school initially did so without asking for the blessing of a state oversight board that is supposed to review public contracts with potential conflicts of interest. Now the watchdog panel wants the contract voided, with one member contending that the U. of I. is acting "above the law."

University officials say they have been operating within the law, but they acknowledged room for improvement. The contract is on hold as the Procurement Policy Board plans to revisit the issue Tuesday and Gov.Pat Quinn'sadministration is urging caution.

"This is a serious matter that should be carefully reviewed now and going forward," Brooke Anderson, Quinn's spokeswoman, said Thursday.

The case illustrates the type of cozy relationship that the state wanted to be sure got an extra layer of scrutiny as part of reforms following the impeachment of former Gov. Rod Blagojevich. The idea is to improve transparency in how contracts are awarded.

The project in question involves renovations to the Urbana-Champaign campus's Natural History Building, where geology, biology and other classes are taught. The 120-year-old building is in such disrepair that half of it is closed, and the university considers it one of the campus's "most critical priorities."

The university gave the architectural design contract to BLDD Architects, a central Illinois firm where Bruce Maxey is a principal who owns 8.9 percent of the company, records show. His wife, Jill Maxey, previously worked at BLDD and is now U. of I.'s associate director of planning. In that position, she works on the initial stages of construction projects. That includes helping draft the scope of the work, coordinating the vendor selection process and helping determine budgets.

Bruce Maxey's firm won the initial contract over 33 others in 2010. BLDD scored just barely above the next two closest competitors, and the university agreed to pay the company $368,000 for the renovation plans. Satisfied with the plans and having secured funding, the university's board of trustees awarded BLDD an additional $4.3 million last December to continue working on the $70 million project.

In a post-Blagojevich world, contracts with potential conflicts of interest are required to go before the five-member procurement board appointed by Quinn and the four legislative leaders.

The oversight board didn't learn about the potential conflict until March — more than a year after the first contract was awarded and months after trustees approved an expansion of the deal. Procurement board members found out the university had bypassed them when the state's chief procurement officer for higher education, Ben Bagby, asked them to waive any potential conflict of interest issues for the upcoming work.

The procurement panel was not on board with that, however. In April, the oversight panel voted 4-0 to recommend the contract expansion be voided because of concerns about conflicts.

"I did not think there was enough transparency so that I could look anybody in the eye and say, 'There's no way … that this woman was involved in that project," said Bill Black, a procurement board member and former Republican state representative from Danville. "You've got to put it out there where reporters and other individuals can look at it and say, 'Ah, that was a fair process.'"

Ed Bedore, the board's senior member appointed by Democratic House Speaker Michael Madigan of Chicago, suggested that the university is acting like it is "above the law."

The procurement panel's thinking was summed up in a letter written by its executive director, Aaron Carter, after the board's vote. "Even the perception of such a conflict of interest can create such a level of distrust with an individual, agency or university that it becomes just as damning to the process as an actual conflict of interest," Carter wrote.

The decision against the U. of I. represents a rare instance when the procurement board voted to recommend voiding a contract. Of the 678 potential conflicts reviewed in the past two years from agencies and universities across the state, the board has voted only three times to void contracts, a board official said. Two of them involved the U. of I.'s partnership with BLDD.

The procurement board's decisions are only advisory, however. Last month, Bagby determined he would disregard the board's recommendation and allow the contract to go forward. He agreed with the university's argument that it would be too costly to change course and pay another company to get up to speed. He also said there was no evidence that anyone acted improperly.

Though they can proceed, university officials indicated Thursday that they probably will wait until the procurement board discusses the issue again Tuesday.

"We will wait until we see the outcome of the meeting and any issues that may arise," said Mike Bass, a U. of I. senior associate vice president in the office of business and financial services. Bass also said he anticipates trustees will discuss the issue at their board meeting next week.

Jill Maxey did not return a call for comment, and university officials responded to questions in writing. University officials said they thought they had procedures in place to avoid a conflict of interest and did not realize they needed to send the contract to the procurement board under the state's new rules. Both the university and BLDD had disclosed the Maxeys' relationship as required, records show.

In addition, the university said it devised an internal "firewall" to keep Jill Maxey out of decisions involving the contract or her husband's company.

But during a May public hearing triggered by the procurement board's recommendation to void the contract, Jill Maxey's supervisor acknowledged that it was an informal wall, and there were "a few slips," according to a transcript. For example, Jill Maxey was copied on emails discussing the project's scope of work as BLDD's proposal was pending, the transcript said.

While Jill Maxey said she did not participate in the selection process, she appointed her subordinate, Tony Battaglia, to the committee. Battaglia had his own potential conflicts: He plays in a band with BLDD employees and his brother-in-law works at the firm.

Battaglia testified that he participated in narrowing the bidders to four but then "recused" himself from working on the final scores because of the associations.

Jill and Bruce Maxey testified that they did not discuss the project while BLDD's proposal was pending.

"Actually, it is going to be hard to believe," Jill Maxey testified, "but we don't talk a lot about the specific projects that Bruce works on because we know that this is a potential situation, and so we actually make a conscious effort to refrain from doing so."

Bagby, along with the deputy general counsel for the state's Executive Ethics Commission, ruled that the U. of I.'s "firewall" was too lax, but neither thought the contract should be killed.

In an interview with the Tribune, Bagby acknowledged that the BLDD contract is "not the best-looking one" but said the U. of I. acted aboveboard.

"You have a situation where the university knew of the potential conflict, it was disclosed, people in the office knew about it, and Jill is not in the decision tree," Bagby said. Going forward, he said, the university should have "a process in place that deals with this better than what was there before."

The two Chicago firms who had the second- and third-highest scores during the selection process both agreed to continue what BLDD started with little or no delays, records show. One declined to comment and the other did not return calls.

Randy West, a vice president at BLDD, said it would "absolutely not" be fair to void the contract. He said the company has worked on U. of I. projects for the past 30 years and has no plans to stop competing for work there. Both he and Bruce Maxey are working on the Natural History Building project.

"We adhere to all requirements and are transparent about any potential conflicts of interest that may arise because we have too much respect for the state and the university to do it any other way," West said.

While the procurement board members plan to discuss the contract at their meeting Tuesday, Bagby said it's time to move on. The university is aiming to complete the project by September 2013.

"You take a situation and you learn from it. Hopefully these things won't have reoccurrence so things can be looked at early on and ahead of the game," Bagby said. "We need to move forward."